Hitachi, Motorola Settle Patent Dispute : Lawsuit: No terms were disclosed but the deal is thought to involve cross-licensing rather than cash payments.
Ending an acrimonious legal battle that sent shock waves through the semiconductor and personal computer industries, Motorola Inc. and Hitachi Ltd. said Monday that they have reached a final settlement in their patent infringement dispute.
Terms of the settlement were not disclosed.
The conflict between the two semiconductor giants threatened at one time to cut off all shipments of Motorola’s 68030 microprocessor, the brain inside many of the personal computers made by Apple Computer and several other companies.
The fight began early last year when Schaumburg, Ill.-based Motorola sued Hitachi, claiming that the Japanese firm had illegally used technology obtained under a licensing agreement with Motorola to manufacture its own line of microcontrollers, chips that govern routine functions in computer peripherals and other devices.
Hitachi countersued, claiming that Motorola had pirated Hitachi technology in designing the hot-selling 68030 microprocessor. In a ruling that took many in the industry by surprise, a federal court judge ruled in March that both sides had infringed the other’s patents, and he ordered both to pay damages and stop selling the offending parts.
Although Hitachi was ordered to pay $1.9 million against $500,000 for Motorola, the ruling was far more damaging to the American firm because it involved the popular 68030, while Hitachi had only relatively unimportant products at stake. Motorola is believed to gain $100 million in annual revenue from the 68030; a cut-off in the supply to customers could have severely damaged the company’s standing in the industry.
The sales ban was delayed while the two sides worked towards a settlement, and they announced last June that they had reached an agreement in principle to resolve the dispute. Analysts said Monday that the agreement probably involves the cross-licensing of various technologies rather than cash payments by either company.
“This lawsuit made the semiconductor industry and their customers pretty uneasy. They’ll be glad it’s settled,” said Jack Quinn, a senior analyst at the chip research firm In-Stat Inc. “It’s made people think twice about having a sole source of supply” for vital parts, he added.
Traditionally, chip vendors have licensed their designs to one or two other firms in order to provide customers--primarily computer companies--with a secure supply of products. But this practice, known as second-sourcing, has fallen out of favor in recent years as chip vendors seek to maximize profits on popular products. Motorola is the sole supplier of the 68030, which is used in most of the Apple Macintosh computers.
Mel Phelps, semiconductor analyst at Hambrecht & Quist, said the original ruling in the case had come as a big surprise to Motorola, adding that it might make companies more cautious about filing such patent infringement lawsuits in the future. The judge in the case said at one point that it was the type of lawsuit that should never have been filed, but rather settled by a cross-licensing arrangement.
Phelps said the case eliminated any presumption American companies might have had that U.S. courts would favor their patent claims over those of Japanese competitors. The protracted settlement negotiations, he added, probably revolved around which products each company should license to the other in order to achieve an equal balance.
